Before the financial crisis, clients prioritized performance above all else when it came to their wealth managers. Now, according to a PricewaterhouseCoopers' report "Anticipating a New Age in Wealth Management," client service and value are becoming more critical.
The report, which surveyed 275 institutions from 67 countries, found that the status quo is shifting: New competitors are displacing larger, more established firms and new regulations and client expectations are forcing private banks and wealth managers to change the way they operate. In the post-crisis world, the client is "cautious, smart, less loyal and expects excellent service and clear value," according to the report. Firms need greater operational efficiency and effectiveness to survive. The report was released Tuesday.
"The DNA of the wealthy client has been transformed by the global financial crisis, the scandals we've been through and regulation," C. Steven Crosby of PwC global private banking and wealth management, Americas, said in an interview. "Clients are less trusting than they used to be. They want transparency and clear value for their money. Standing still is no longer an option and institutions must now quickly adapt or face being left behind."
The good news is that for those firms that can keep their heads above water, there are many opportunities for growth.
Nonetheless, the survey found that the industry faces pressures in crucial areas: Clients are now more active in managing their financial affairs and they are paying more attention to reputation, regulatory compliance and risk management.
Wealth managers' average cost-to-income ratio remains high, with 28% of respondents reporting cost-to-income ratios of less than 60%. Only 9% achieved revenue growth of more than 10%. Survey respondents see new competitors on the horizon.
